2017 (12) TMI 145 - AT - Central Excise

CENVAT credit - input services - Banking and Other Financial Services - Legal Consultancy Services - Held that - on going through the specimen bills issued by the Bank and enclosed with the Appeal Paper Book, invariably in all the bills Service Tax was paid on the Banking Commission charges in relation to foreign remittance and nowhere the charges in the said bills were collected relating to forward contract entered into between the appellant and the Bank - the Service Tax paid on Commission Charge on foreign remittance is eligible to Cenvat Credit under the category of Banking and Financial Services . With regard to Cenvat Credit availed on Legal Service , the issue is more of less covered by the Judgment of Hon ble Allahabad High Court in the case of CCE Vs HCL Technologies Ltd 2014 (11) TMI 663 - ALLAHABAD HIGH COURT , where it was held that Legal Consultancy Services have been held to fulfill the definition of the expression input service . Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Eligibility of Cenvat Credit for Service Tax paid on banking and financial services
- Eligibility of Cenvat Credit for Service Tax paid on legal consultancy services

Analysis:

Issue 1: Eligibility of Cenvat Credit for Service Tax paid on banking and financial services
The appellant availed Cenvat Credit for Service Tax paid on services like "Banking and Other Financial Services." The Revenue contended that the charges paid by the appellant to the State Bank of India were related to forward contract charges, not eligible for credit. However, the Tribunal found that the Service Tax paid on commission charges for foreign remittances is indeed eligible for Cenvat Credit. The Tribunal examined the bills issued by the bank and noted that the Service Tax was specifically paid on banking commission charges for foreign remittance, not related to forward contracts. Citing precedents like Meghmani Dyes & Intermediates Ltd, Vishal Malleables Ltd, and Flamm Minda Automotive Ltd, the Tribunal allowed the Cenvat Credit for banking and financial services.

Issue 2: Eligibility of Cenvat Credit for Service Tax paid on legal consultancy services
Regarding the eligibility of Cenvat Credit for Service Tax paid on legal consultancy services, the appellant argued that these charges were incurred in litigation abroad related to their business activities. The appellant cited the decision of the Allahabad High Court in the case of CCE Vs HCL Technologies Ltd to support their contention. The Tribunal considered this argument and found merit in the appellant's claim. The Tribunal noted that the legal services had a nexus with the appellant's business activities and were specifically included in the scope of "Input Services." Therefore, the Tribunal allowed the Cenvat Credit for legal consultancy services.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief as per the law. The judgments of the Tribunal and the Allahabad High Court played a crucial role in determining the eligibility of Cenvat Credit for the Service Tax paid on banking and financial services as well as legal consultancy services.